The Japanese auto maker on Wednesday announced its biggest management overhaul since founding-family scion Akio Toyoda took over as president in 2009. The moves will open up the world's No. 1 auto maker to its first outside directors in its 76-year history, accelerate generational change in the executive ranks and streamline the company's decision-making.

Among the three outside directors named to the board is Mark Hogan, a former General Motors Co. executive who once ran a now-dissolved California joint venture between Toyota and GM.

Mr. Toyoda said the reorganization was undertaken to better enable the Japanese company to handle growth as it continues its push beyond a string of challenges, such as a massive recall at the start of his tenure. "The objective of the changes being announced today is to build an organization where people can take ownership of their work as we enter a new phase of growth in vehicle sales," he said at a news conference in Tokyo.

Some analysts evaluated the moves favorably, especially a decision to have company units focus on specific products, and a decision to appoint Takeshi Uchiyamada as chairman. Mr. Uchiyamada is seen as the driving force behind Toyota's successful hybrid vehicle, the Prius.

The changes mark a generational shift at Toyota, as Mr. Toyoda bids farewell to some of his closest allies. Three executive vice presidents and the current chairman, Fujio Cho, will retire. Two deputies will be promoted.

Commenting on the move to appoint outside directors for the first time, despite the relative insularity of Japanese businesses, Mr. Toyoda said the company wants to improve transparency after years of requests by shareholders to take on external board members. "As a global company, we'd like people to view us as an open company," he said.

Toyota will condense its businesses into four main units, creating a structure that the company said should "clarify operations and earnings responsibility as well as speed up decision-making." The units include one for the developed markets of North America, Europe and Japan, another for emerging markets such as China and Latin America, and one to run the company's Lexus operations. The fourth unit will focus on the development and production of vehicle components such as engines and transmissions.

As part of Wednesday's changes, Toyota named James Lentz to lead its efforts in North America. Mr. Lentz currently heads Toyota sales in the U.S.

Mr. Toyoda said it is time to look forward. "My first four years were filled with challenges, which we all worked hard to overcome," he said.

Those obstacles included a recall over allegations of unintended sudden acceleration by Toyota vehicles, a problem that raised questions about the company's quality control, safety measures and customer service. The company also confronted supply-chain disruptions after the 2011 earthquake and tsunami, and a persistently strong yen that undercut profit. But despite several difficult years, Toyota has returned to the top, regaining the crown as the world's No. 1-selling auto maker for the first time in two years in 2012.

Mr. Toyoda emphasized on Wednesday that growth, however, doesn't necessarily equal success. He said the company must put a system in place that can cope with fast-paced growth. "Rapid growth can also mean rapid descent, causing trouble for many people," he said. The larger Toyota becomes, the more difficult it becomes to foster a sense where each worker feels he or she plays a direct role in supporting Toyota."

The retiring executives are some of Mr. Toyoda's closest and most experienced lieutenants, and were pivotal in steering Japan's largest auto maker through its difficult times.

Shinichi Sasaki, who was in charge of quality control, played a key role in handling the 2009 recall. Mr. Sasaki will retire along with Atsushi Niimi, who oversaw production and the auto maker's booming North American business, and Yukitoshi Funo, who led the emerging-markets business. All three were appointed to their current positions at the same time Mr. Toyoda, the grandson of the founder, became president.

"I take [all these changes] as a clear statement by the company that it will reinforce its manufacturing prowess," said Satoshi Nagashima, a senior partner at consulting firm Roland Berger, referring to Mr. Uchiyamada's appointment and the new structure that will allow each business unit to focus on specific products, such as mass-market cars and upscale vehicles.

The move by Toyota—Japan's largest company by revenue—to add outside directors to its board marks a significant shift, not just for the auto maker, but also for corporate Japan. Major Japanese companies have, historically, been reluctant to bring outsiders into the boardroom, a pattern that many corporate-governance experts have said has led to insular management and a number of high-profile corporate scandals in recent years.

As of March 2011, just 47% of the companies listed on the first section of the Tokyo Stock Exchange had outside directors, according to the Research Institute of Economy, Trade and Industry, a government-affiliated think tank. Of those, the majority had just one. Outside directors made up about 10% of all board members for the TSE top-tier companies—compared with 70% in the U.S., 50% in the U.K. and more than 30% in South Korea, the institute said.

Under Toyota's new board, three of 16 directors, or 19%, will be outsiders. In addition to Mr. Hogan, the company said it is nominating as directors a Japanese life-insurance executive and the head of a company in charge of clearing and settling securities transactions. The management changes will take place pending a vote at the annual general shareholders' meeting in June.

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